A brief statement of views:

Global Healthcare's traditional business, financial leasing, consulting, and department upgrades, continues to develop steadily. In October of this year, the supply chain platform of the First Affiliated Hospital of West Jiaotong University initially began testing, and the International Dry Port Hospital entered the actual construction stage. In August of this year, six ministries and commissions jointly issued a document to guide the enterprise's hospital reform, which also brought new opportunities to the company.

We continue to be optimistic about the company's comprehensive medical service model. We believe that the enterprise hospital reform will bring new development opportunities for the company's hospital management business for some time to come, maintain a “buy” rating, and a reasonable valuation of HK$9.9. We forecast net profit of RMB 1,108, 14.8 and RMB 1.68 billion for 2017-2019, respectively. The closing price of HK$7.88 on October 25 corresponds to 9.8, 7.8 and 6.9 times PE for 2017-2019, respectively.

Risk warning

1. There have been adverse changes in health care reform and PPP policies.

2. The progress of the company's hospital investment management business fell short of expectations.

3. The rapid rise in interest rates has caused the company's costs to rise too fast.